Shares of Amicus Therapeutics (NASDAQ:FOLD) fell over 15% today after the company announced a stock offering seeking $150 million in gross proceeds, which could become $172.5 million if additional allotments are issued. The company says it will use the proceeds to invest in clinical development of its gene therapy pipeline as well as its gene therapy manufacturing efforts.
Therefore, today's drop simply accounts for the share dilution that's expected to result from the offering, although it seems to be a bit overdone. While a price wasn't set and it appears the offering will occur in the public market, the company could see its outstanding share count rise by 7% to 10%. As of 1:47 p.m. EDT, the stock had settled to a 12.1% loss.
Amicus Therapeutics exited March with $438 million in cash, cash equivalents, and investments. But developing biologic and gene therapy drug candidates is an expensive endeavor. Preparing and securing the manufacturing capacity alone can cost significant sums, which has prompted several multibillion-dollar buyouts of gene therapy manufacturers in recent months.
Indeed, the business listed building "manufacturing capabilities for Pompe biologic AT-GAA and gene therapy product candidates" and the "completion of the design and build of the Amicus Process Science and Gene Therapy Manufacturing facility" as primary uses for the new capital.
Although the dilution stings, Amicus Therapeutics is confident in its long-term strategy. The biopharma expects its Fabry disease drug Galafold could grow annual revenue to $500 million by 2023 and reach $1 billion by the end of the decade. If that pans out and its gene therapy pipeline enjoys a success or two, then investors surely won't remember today's news in a negative light -- if they remember it at all.